Buying real estate with a trust in Mexico

Manzanillo is one of a kind in beauty and value. Of increasing popularity is touring and obtaining real estate in Manzanillo. There is a lot of confusion out there about owning property in Mexico. Especially when it comes to owning owning property in the "restricted zones" like close to the beach, and near the borders, Manzanillo included.

As experienced real estate owners in Mexico, let us clear up a few misunderstandings about owning Manzanillo real estate. We've dont this before, so following these instructions will make it as easy and quick as possible. We pretty much know how the process works and understand the reasons for this method of property ownership, so here is a partial explanation for the trust method of property ownership in the “Coastal Zone” of Mexico.

The laws have shifted greatly. No longer is owning land in Mexico out of the realm of possibility to foreigners. It’s still not unusual to have someone emphatically exclaim that “you can’t own property in Mexico”, or that “you have to have a Mexican partner on title to own property in Mexico”. These and other perceptions are just that: perceptions.

Reality is something like this (give me a little wiggle room here on the details, but I think this is close):

At one time the Mexican Government prohibited foreign nationals from owning land in the restricted border zones (within 50 km. of the ocean, border etc.) because they were concerned about being taken over by foreigners. This became a part of Mexico’s Constitution and as such can not be altered. Owning land in Mexico was a risky venture back then, and only the truly brave (or stupidly rich) would attempt it.

The solution to this is a Fideicomiso, or land trust. The governemnt has instituted this provision to allow foreigners to own real estate in the restricted areas of Mexic, such as the Manzanillo beachfront. Not unlike a trust created in Canada or the USA where assets are lodged in the trust and held for the exclusive use of the beneficiary, your Mexican trust holds the property deed for the sole benefit of you, the beneficiary. You have the right to do anything with the property (within the law of the local jurisdiction of course). You can occupy, rent, sell, develop, lease, etc. at your discretion. One advantage of the trust is that when creating the trust document for a specific property, you lay out your beneficiaries upon you death, eliminating the need for a Mexican Will.

Really, there isn't much by way of downside to this. Prices for everything are only slightly higher than a Mexican national would have to pay, and the yearly fee payed to the bank isn't terribley high. I look at this fee (tax on us) that Mexican’s do not have to pay, as a part of the price we pay to enjoy all that Manzanillo has to offer. This ‘payment of yearly trust fee’ certainly makes for good discussion at margarita time.

Your real estate purchase does not include the requirement of being a Mexican resident. The laws governing property ownership are certainly different from ours, but the result is nearly the same. The fideicomiso system is complete, if inconvenient, and it makes buying and selling property in Mexico safe and secure. When the time comes, make sure you use a good Notary that adheres to the proper procedures. Ask questions!

This should clear up most questions about the topic. There is lots of information on trusts in different publications and on the internet, most of which is factual. The Fideicomiso system makes owning real estate in Manzanillo painless and effecient, sans a few trips to the Notary. International living is within your reach!